Business
Instructions
Topic: Distinguish between value-based pricing and cost-based pricing.Word count: 450-500Use the following source: Principles of Marketing by Philip Kotler and Gary Armstrong, 16th Edition, 2016.
Answer
Differences Between Cost-based and Value-based PricingThe pricing of goods or services is an essential decision-making tool for a company. Pricing has a long-lasting influence on the company and its life (Kotler & Armstrong, 2016). It is, therefore, necessary to follow an appropriate pricing approach for this reason. Firms and business institutions have methods to come up with prices for their goods and services. Among the most common techniques are value-based pricing and cost-based pricing methods. When a firm applies the cost-based pricing method, it establishes a price that is a percentage above the cost of producing the good or availing a service. Value-based pricing, on the other hand, takes a diverse method. It reflects the possible value that the commodity or services will off...
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